Horizontal vs. Vertical Integration

Vertical Integration

From my research, I have found that vertical integration is when a company has ownership of the production, distribution and exhibition of the film. The company receives all of the profit that the film makes, because they are responsible for every aspect of making the film, marketing it and getting it to be consumed by the audience.

"When a company wishes to grow through a vertical integration, it is seeking to strengthen its supply chain, reduce its production costs, capture upstream or downstream profits, or access downstream distribution channels. To do this, one company acquires another company that is either before or after it in the supply chain process."

Horizontal Integration

My research tells me that horizontal integration is when a company expands by purchasing other companies that are of the same size in the same area of industry that they are in. For example, a production company would purchase another production company in the hopes to expand, and to decrease the amount of production competition that it faces. 

"When a company wishes to grow through a horizontal integration, it is seeking to increase its size, diversify its product or service, achieve economies of scale, reduce competition, or gain access to new customers or markets. To do this, one company acquires another company of similar size and operations, in the same industry. Two great examples of a horizontal integration are the acquisition of Pixar by Disney or the acquisition o Instagram by Facebook."

Here is a case study on 'Casino Royale' that I found whilst researching. At the beginning, it outlines what horizontal and vertical integration are. It also gives details on synergy.